Germany will seek to brake outside speculation in agricultural commodities, German Farm Minister Ilse Aigner told a newspaper Jan. 17.
“I am greatly concerned that the markets with their derivatives for agricultural products are increasingly developing their own independent existence,” she told the dailyHandelsblatt. “This reaches into price manipulation.”
The French government the previous week repeated its call for stricter regulation of commodity investment in farm commodities. The European Union Commission and U.S. futures regulators are also discussing tighter regulation of commodity markets.
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Aigner’s ministry has sent a position paper to other German departments for approval after which it could become policy, the Handelsblattreported.
Aigner is proposing state limits on agricultural price movements are imposed.
“The price limits should be product specific and set down by the responsible supervision authorities,” she told the newspaper. “We need realistic limits for the daily price movements of specific products such as grains and soybeans.”
But such controls should not stop long-term price trends, she said.
Trading volumes of individual market participants should also be limited, she said.
There should also be a central transaction register and a central clearing point for the processing of over-the-counter (OTC) agricultural derivatives, she said.
OTC derivatives are contracts traded between two parties without going through an exchange.
Aigner said financial derivatives gave market participants a method of protecting themselves against price swings, but heavy speculation means they can also influence overall prices.
